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About this blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and we lived for nearly 30 years in the Duveneck school area. Our children went to Paly. We moved ... (More)

About this blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and we lived for nearly 30 years in the Duveneck school area. Our children went to Paly. We moved downtown in 2006 and enjoy being able to walk to activities. I do not drive and being downtown where I work and close to the CalTrain station and downtown amenities makes my life more independent. I have worked all my life as an economist focusing on the California economy. My work centers around two main activities. The first is helping regional planning agencies such as ABAG understand their long-term growth outlook. I do this for several regional planning agencies in northern, southern and central coast California. My other main activity is studying workforce trends and policy implications both as a professional and as a volunteer member of the NOVA (Silicon Valley) and state workforce boards. The title of the blog is Invest or Die and that is what I believe is the imperative for our local area, region, state and nation. That includes investing in people, in infrastructure and in making our communities great places to live and work. I served on the recent Palo Alto Infrastructure Commission. I also believe that our local and state economy benefits from being a welcoming community, which mostly we are a leader in, for people of all religions, sexual preferences and places of birth. (Hide)

How are Regional Growth Projections Developed?

Uploaded: Jul 11, 2009

Town Square has had several lively threads about the local planning guidelines for allocating projected regional housing growth. This is a small but generally contentious piece of the larger regional growth projection process that regional planning agencies like ABAG (the Association of Bay Area Governments) do to meet planning and legal requirements.

The purpose of this blog is to explain how regional growth projectionsjobs, population, and housingare done and what the regional projections are used for. I do this work professionally. I have never worked with or for ABAG but I do work regularly with their regional counterparts in Southern California and the Sacramento region.

In the early years regional growth projections were used mainly for major infrastructure planning such as major transportation investments. In more recent years they are sued for sub regional housing planning guidelines and now for greenhouse gas emission and regional sustainability planning under AB32 and SB375.

The simplest way to envision the regional growth projection process is that it has two main technical componentsthe national projected "pool" of future growth and the regional projected "share" of U.S. growth.

The projections task at the U.S. level is to determine the likely population and then job growth into the futureusually regional plans look out 20-30 years. The main determinant of future population growth is the level of foreign immigration. There is broad agreement on projecting fertility rates (not much change from now except for declining fertility rates for the Hispanic population) and on projecting life expectancya gradual increase over time.

There is more uncertainty about future immigration, which has both a policy componentthe U.S. can change legal immigration limitsand on the demand for immigration, which depends on U.S. labor market trends but also economic progress in the major "sending" country economies. The current Census Bureau projections anticipate continuing high and increasing levels of immigration and an average U.S. population gain of 3 million per year.

Three million people a year is 30 million a decade and 75 million over the next 25 years. The Bay Area has just over 2.4% of U.S. population and if that share remained unchanged we would get 1.8 million more people over the next 25 years. This is not how the regional growth projections are done but the final answer doesn't vary a lot from this crude approximation.

Regional growth projections start with job projections. Everyone who does this work does it the same way in the sense of starting with job projections. If you think about it in terms of history this makes sense. The population around Detroit did not slow and decline causing the auto industry to shrinkit was the other way around. Out-migration from Southern California in the early 1990s did not cause the aerospace industry shrinkageit came after and as a result of the loss of jobs. Bay Area population growth was 40,000 in 2003 following two years of job losses and 97,000 in 2008 following two years of strong job growth.

U.S. job growth is projected based on 1) projected population growth and 2) labor force participation trends. The two major labor force trends are 1) the tendency of older workers to stay in the workforce longer for health and financial reasons and 2) the aging and eventual retirement of the huge baby boom generation. For the next 20 years labor force growth will be slightly lower than population growth as the retirement factor outweighs the working longer factor.

To do regional job projections the U.S. job growth is analyzed by industry. The projected regional share of U.S. jobs (think about the Bay Area) is determined by which sectors are growing faster and slower and how the Bay Area is positioned to share in the growth of each industry.

The Bay Area has for many decades had a well-positioned economic base. The region has been a high tech center as well as a major international finance center. a major tourist region and the home of many Western region headquarters operations. As a result Bay Area job growth has slightly outpaced the nation. Still today the Bay Area is home to nearly 40% of all U.S. venture capital investments. And the administration's agenda to promote innovation and technology further strengthens the region's competitive position.

There are negative factors that will restrain the region's share of U.S. job growth but most projections analyses expect that the region will continue to post average to above average job growth.

This is a simplified version of the growth projection work but the bottom line is that the Bay Area is poised to get enough job growth to translate into approximately 2 million additional residents over the next 25 years. The major factors that would push this projected growth to be somewhat lower are reduced immigration into the U.S. or a bad Bay Area economy.

Regional population is projected by age, gender and ethnic group. The 20-34 and 55+ age groups will have the major numerical increase over the next 20-25 years. The number of residents aged 35-55 will stay the same.

Household growth is projected by projecting household formation behavior by age and ethnic group. The major trend to be expected is that younger Latino and Asian residents will have household forming (and labor force participation behavior) less like their parents and more like other younger generations over time. These changes will push up housing demand slightly.

This is the technical part of the growth projection process. There are also policy considerations and local input. Often regional job growth (maintain or increasing competitiveness) requires policies and investments. For example in Southern California long-term Pacific Rim economic growth bodes will for port traffic and jobs. But without infrastructure and air quality policies this growth will not be possible. Housing has been one of the potential obstacles to Bay Area economic competitiveness for many years.

Regional growth projections are tested against local general plans but also against local general plan possibilities. In the two regions in which I work there is considerable dialogue with local communities BEFORE the more contentious regional housing allocation process is begun.

One of the challenges in all regions is that local general plans (added together) have enough space for projected job growth but often do not have enough capacity planned to meet projected regional housing demand. This is not a challenge confined to the Bay Area.

In the end as I argue on the 'Quiet suburb" thread, regional planning involves a collaborative effort involving regional and local voices and rights. Now with AB32 and SBV375 there are other legal requirements for regions to strive to allocate and plan for regional growth in ways that are sustainable with reference to traffic and greenhouse gas emissions.

I don't know if it would make any difference in the Bay Area, but in the regions in which I work it seems to help to have the regional growth projection process and results explained and discussed before the sub regional allocations and planning issues are discussed and decided.

I will be happy to answer any general or Bay Area questions about projecting regional growth.